At a crucial moment for Time Warner, Jerry Levin is squirming in the spotlight. Wall Street analysts, Hollywood executives, Time Warner staffers and its potential partners are studying the introspective new CEO and asking: can he fill the shoes of the larger-than-life Ross? Is he anything more than a loyal soldier to the controversial chairman? (Time Warner maintains that Ross’s absence is “temporary,” but many close to him say that his condition is deteriorating.) Levin’s handling of the Ice-T flap raised anxieties that he hasn’t developed the instincts to lead Time Warner. But another picture is emerging: a crafty executive who will maintain the status quo as long as Ross remains chairman, but who is very much his own man. There’s speculation that Levin will sell assets to reduce debt (anathema to Ross) and unload trusted Ross advisers. “His alliance with Steve was a marriage of convenience,” says one executive close to both. “Until Steve is gone, you’ll never know what Levin’s views are.” (Levin declined to be interviewed.)
Levin takes the reins at a promising moment. After losing $326 million over the past two years, Time Warner has had three straight profitable quarters. Warner Music Group, the world’s largest record company, earned $256 million in fiscal 1991. The film studio, Home Box Office, cable and the publishing division are big moneymakers. And last year’s $1 billion investment from Japanese giants Toshiba and C. Itch bolstered the balance sheet and lessened the urgency of finding new investors to help pay down the $9.2 billion debt.
In many respects, Levin has demonstrated an intellectual depth and a sure-footedness that should serve him well as Time Warner’s boss. Levin, who joined HBO in 1972 after a decade as an attorney and an international-investment manager, caught the attention of top Time executives when he proposed distributing the channel’s signal by satellite, a strategy that revolutionized cable. Later, after orchestrating the 1989 Time-Warner merger with his colleague-rival Nick Nicholas, Levin helped engineer Nicholas’s corporate execution with Machiavellian brilliance. As Connie Bruck’s New Yorker article reports, Levin assured the brusque, unpopular Nicholas of his support while cultivating Ross and forging alliances with anti-Nicholas executives, including HBO chairman Michael Fuchs. Last February, the board ousted Nicholas at Ross and Levin’s behest-and installed Levin as co-CEO.
Still, some people are worried by Levin’s lack of charisma compared with Ross. While Ross is a garrulous extrovert, Levin is quiet, cerebral, “completely unassuming,” according to one top Time Warner executive. Ross is an aggressive dealmaker, “a killer who is happiest when taking your pants down,” Hollywood mogul David Geffen has said. Levin is hardly known for his financial skills, having bungled several deals at HBO, including an overpriced partnership to form TriStar Pictures. Ross built Warner into a global empire partly through his close relationships in the film industry, ranging from Steven Spielberg to superagent Michael Ovitz. Levin knows few people in Hollywood. “The key to power in the film business is having ties to the community,” says one Hollywood power broker. “Look at [Disney’s] Michael Eisner, [ex-Fox chairman] Barry Diller. They can reach out, talk to people. Steve was tough, but everyone felt they could hug him. Nobody knows if they can hug [Levin].”
Certainly Levin’s inexperience in the public eye hasn’t helped. After the emotional protests against Warner’s “Cop Killer,” Levin fumbled his response to the pressure. Insiders say Warner Bros. Records chairman Mo Ostin urged Levin to defend the record on the grounds of creative freedom. Other top Warner executives advised him to withdraw the song and admit Time Warner had made a mistake. Levin, eager to win the respect of the creative community, accepted Ostin’s recommendation. The result? Ice-T withdrew “Cop Killer” anyway, and Time Warner’s board and staff divided over Levin’s handling of the problem. “Jerry is a philosopher-businessman who talked himself into a preposterous argument,” says Richard Clurman, a former Time executive who wrote a highly critical book on the Time Warner merger.
Public relations isn’t the only skill Levin needs to master. So is keeping the peace among division heads. HBO’s Fuchs and Warner Bros. boss Robert Daly have always had a tense relationship; Fuchs opposed the Time Warner merger, preferring to expand HBO rather than surrender power to the film studio. Now, with Ross’s influence waning, the delicate balance may be shifting toward Fuchs: in June, HBO agreed to provide Savoy Pictures Entertainment, a new movie distributor, with as much as $500 million in production money. Daly went ballistic, insisting HBO shouldn’t climb into bed with a rival of Warner’s. Levin must find a way of mediating their disputes so that Time Warner’s global strength will benefit from “synergy” between the divisions. If not, “it’s intramural-football time,” says one observer.
Is Levin out of his league? Hardly, say many insiders. In fact, he may be just what Time Warner needs. Sure, Levin lacks strong relationships in Hollywood, but those may come. Besides, Paramount chief Martin Davis and Fox’s Rupert Murdoch have done fine without being world-class schmoozers. “It’s not his job to know anyone in Hollywood,” says Daly. Few see Levin’s lack of dealmaking prowess as a problem; longtime Time Warner advisers such as Felix Rohatyn will be there to guide him. (And some of Ross’s complex machinations, such as the aborted 1991 stock offering, hardly helped the company.) Levin’s manifold enthusiasms–from film history to Quantum, Time Warner’s 150-channel cable system in New York City’s borough of Queens-reflect a deep appreciation for both technology and software, which is crucial in today’s marketplace. And unlike Ross, Levin has expertly bridged the Time and Warner corporate cultures, avowing that the publishing division remains the “creative core” of the company. “There’s every reason to believe he’ll be a superb CEO. And a superb visionary,” says David Geffen.
Still, few know exactly what Levin has planned, nor will they until the torch is passed. “Ross is still exercising control,” says one person close to him. “He got rid of Nick Nicholas without showing up in the office.” For now, Levin’s agenda is to carry out Ross’s wishes: lower the debt and boost the stock by selling minority stakes to European firms. But that strategy could change if Ross doesn’t return. Levin, who never shared Ross’s distaste for selling assets, could spin off cable systems, maybe even the publishing division someday. “He could be like Martin Davis, who got rid of everything after [Gulf + Western chairman] Charles Bluhdorn died,” says an insider. “You’re going to see who Jerry Levin really is.” Chances are it won’t be the same Jerry Levin whom Steve Ross anointed to carry on his vision six months ago. But Time Warner may be better off as a result.
